$440B Worth of Black Money Went Out of India during the Last Decade [Report]

A report released by the US based watchdog Global Financial Integrity (GFI) that exposes financial corruption has made some shocking revelations. As the government of India is renewing its pledge to take up the issue of black money and upping its ante against the same, the report has stated that nearly $440 billion has flowed out of our country in the last ten years.

In what comes as a dubious distinction for us, India has been placed third in the list of countries ranked according to the amount of black money that moved out of their shores in 2012, with only Russia and China being placed ahead of us. The five countries with the maximum outflow of dirty money during the decade ending 2012 were China, Russia, Mexico, India and Malaysia.

While we continue to languish at the bottom of the tables in development index, Ease of Doing Business, etc, corruption is one area where India has always managed to hold its head high– always among the top ten!

That is sad for an average Indian who pays his taxes honestly, sometimes much more than what their counterparts in other parts of the world do.

The GFI pointed out that the most popular mode of moving illegal money was under-billing or over-invoicing– this alone accounting for nearly 78% of illicit wealth outflows in 2012.

The illicit funds that flowed out from developing countries during the 2003-2012 period were to the tune of a whopping $6.6 trillion- huge enough to sustain a few cash strapped African nations for a year or two! $439.59 billion out of that flowed out of our shores, the table-toppers being China ($1.25 trillion), Russia (973.86 billion) and Mexico ($514.26 billion).

That would amount to nearly $43.96 billion a year every year over the last decade. That, however, was only 10% of the illegal capital moving out of all developing countries, says the Washington based research firm. Almost $1 trillion of illicit money flows out of poor and middle income countries every year. Ironically, the poorest of countries are the hardest hit.

“This is a trillion dollars that could have contributed to inclusive economic growth, legitimate private-sector job creation, and sound public budgets,” said Joseph Spanjers, one of the authors of this report.

The GFI research tracks black money flowing out of 151 countries using trade and balance of payment reports submitted by these countries with the IMF and were, at best, only estimates.

GFI President Raymond Baker said the estimated losses were conservative but were still more than 10 times the total amount of foreign aid these countries received. He called the growth rate “alarming”, having surged from about $297 billion in 2003.

“Illicit financial flows are the most damaging economic problem plaguing the world’s developing and emerging economies,” Baker said in a statement.

“It is simply impossible to achieve sustainable global development unless world leaders agree to address this issue head-on.”

The Indian government has also come down heavily on the issue in the recent past and is already taking steps to address the problem. The Supreme Court has constituted a Special Investigation team (SIT) to trace unaccounted wealth within India and across its shores. The new government has renewed its pledge towards tackling this menace.

Do you think those measures will help deter those stashing away huge amounts of money year after year?